Koizumi's Cabinet is in make-or-break situation

TOKYO: With a mixture of expectation and anxiety, the nascent Cabinet of Prime Minister Junichiro Koizumi began its journey Thursday.

The Japanese economy, dogged as it is by a serious recession and heavy deflationary pressures, is at a critical juncture where it could slide into a deflationary spiral. Politicians' inability to implement effective measures has only deepened the crisis and sown seeds of anxiety among the public.

The new administration's biggest challenge is to find a path to an economic resurrection under the leadership of politicians and thereby revitalize Japanese society.

Failure in this regard will not be tolerated.

At their meeting Saturday, Group of Seven (G-7) finance ministers and central bank governors are expected to express concern over the possible grave consequences a slowing Japanese economy could inflict on the global economy and to press Japan to act boldly in reviving its economy.

The disposal of bad loans is the top priority in the battle against deflationary pressures, and ultimately in the war against the recession itself.

The recent emergency economic stimulus package worked out by the government and the ruling parties called for the disposal of bad loans within a certain time frame. The reappointment of Hakuo Yanagisawa as state minister in charge of financial policy demonstrated Koizumi's determination to respond to domestic and international calls for clearing bad loans from the financial sector as early as possible.

The new administration must work out specific rules for the disposal of nonperforming loans and use the G-7 and other international meetings forums to explain the steps required to tackle this thorny task to those at home and abroad.

Bold policies must be implemented if the administration wants to see the revival of the Japanese economy. Koizumi most likely had this goal in mind when he appointed Heizo Takenaka to the post of state minister in charge of economic, fiscal and information technology policy.

Koizumi, however, has yet to present a complete picture of what he calls structural reform.

The compilation of the fiscal 2002 budget will be the real test of his structural reform agenda. Koizumi has pledged to keep government bond issues below 30 trillion yen in the next fiscal year's budget.

The budget compilation should demonstrate how the new prime minister's structural reforms will implement his agenda of busting a mechanism built on vested interests, including a review of public works spending.

In addition to seeing to the nation's fiscal health, the administration also faces the challenge of reviving domestic industry. No time can be wasted in setting priorities and pushing ahead with IT and other strategies in order of priority.

To dispel public anxiety over the future, the prime minister must provide a complete picture of structural reforms to be made to the social security and the tax systems.

The newly launched cabinet has three appointments from the private sector and two lawmakers with no factional affiliations. Furthermore, it includes only two members of faction led by former Prime Minister Ryutaro Hashimoto, the LDP's largest.

Before forming his cabinet, Koizumi vowed "to put the right person in the right place without being bound by factional affiliations." In fact, the new cabinet's makeup differs significantly from the conventional balance of factional power.

He certainly was bold in his appointments, but grave concern exists as to whether the new administration will be efficiently managed.

Under the administration of former Prime Minister Yoshiro Mori, the limits of Mori's leadership style -- one of coordinating opinions before making decisions -- obstructed the implementation of prompt and bold policies when they were needed. Koizumi is expected to take a lesson from Mori and create and implement major policies on his own steam.

The new central government system launched in January gave the prime minister the initiative at cabinet meetings and beefed up the cabinet's functions. Thus, the government already enjoys the conditions for promoting important policies under the initiative of the prime minister, instead of that of political parties or politicians.

We believe the public expects Koizumi to take this political initiative.

The new prime minister has cabinet experience as minister of health and welfare as well as of posts and telecommunications, but his capabilities in the field of diplomatic and security policies have yet to be tested. Concern indeed exists over how efficiently he will be able to exercise his leadership in tackling various issues in these fields.

Another task facing the new government is that of expediting efforts to reshape its diplomacy, which slowed down at the end of the Mori administration.

Thus, we question Koizumi's decision to appoint former Science and Technology Agency Director General Makiko Tanaka as foreign minister. Like the new premier, Tanaka has absolutely no experience in the fields of diplomacy and security.

We also urge the new government to immediately start negotiations over East Asia strategy -- including the Japan-U.S. alliance -- with the administration of U.S. President George W. Bush that puts the alliance between the two countries first.

China's moves and developments in the Korean Peninsula must be closely watched, and specific strategies must be developed, taking projections of the region's future configuration into account.

The new government will be required to make difficult political decisions concerning the Japan-China relationship, which has been strained over the dispute over a middle school history textbook, policies toward North Korea and negotiations with Russia on a territorial dispute. These issues should not be left in the hands of Foreign Ministry bureaucrats.

We are concerned whether Tanaka will be able to take on such heavy responsibilities as foreign minister.

Yet another important task for the Koizumi Cabinet is to present an image of nationhood for the new century.

During the LDP presidential campaign, Koizumi called for an early revision of the Constitution, approval to implement the right to collective self defense, and amendments to the Fundamentals of the Education Law. None of these proposals, however, appears in the nine-point policy agreement reached by the three ruling parties Wednesday.

They probably were withdrawn to preserve the alliance with New Komeito, which has objected to such proposals.

All these proposals, however, concern the very foundations of the nation and are essential issues for state-building in the new century.

The prime minister must not put off efforts to deal with these issues, but must exercise the leadership to carry out his plans.

At a time of drastic changes and lack of transparency, a leader is required to present a clear vision of the future to the people.

-- The Yomiuri Shimbun